China

China

Power contract for Chinese turbines

1 October 2009

Potential foothold

Minnesota may soon host the first Chinese-made wind turbines on American soil, if a deal between major Chinese supplier Goldwind and US utility Xcel Energy comes to pass. Three 1.5 MW direct-drive turbines from Goldwind are to be installed in coming months at the Uilk wind farm near Pipestone, Minnesota, and a power purchase agreement is already in place.

The potential importance of the 4.5 MW wind project is greater than its small size suggests, being the first Chinese foothold in the world's largest wind market. Wind experts speculate that if Chinese suppliers apply their renowned capabilities in low-cost manufacturing and launch an export offensive, this would put pressure on prices for competing Western and Japanese products.

Slow progress

The US project has moved through the pipeline since last year, when executives from Goldwind and Xcel met to explore setting up operations in the US and Minnesota, says Xcel spokeswoman Patti Nystuen.

According to Nystuen, the utility signed a power purchase agreement with the Uilk wind project and commercial operation is expected to begin on December 31. Goldwind sources in China, though, say the turbines have not yet left the country. Ji Tian, in charge of investment securities for Shenzhen Stock Exchange-traded Goldwind, says that uncertainties now linger over the timetable.

The Uilk wind project is structured as an individual limited liability corporation (LLC), as are most US individual wind projects. Project company TianRun Uilk LLC is 75% owned by TianRunUSA, a Goldwind subsidiary, with the remaining 25% split between small local developers Dakota Wind (10%) and an entity called Horizon Wind (15%). TianRun Uilk owns 97% of the project, local farmers own the other 3%.

The identity of Horizon Wind, referred to in a Goldwind document, is unclear. Sarah Bray, spokeswoman at Portuguese energy company EDP Renovaveis subsidiary Horizon Wind, calls the minority partner in the Uilk project a "totally separate company" that only happens to share its name. The EDP subsidiary says it has not signed an agreement with Goldwind, nor engaged in discussions.

If the Goldwind plan is not realised, it will not be the first time that a deal for Chinese turbine exports to the US is announced, only to be followed by confusion and delay. In January 2008, wind developer GreenHunter Energy, based in Texas, said it would take delivery of two 1.5 MW units from China's Mingyang Wind Power Technology for a pilot project in Montana, with bigger deliveries to follow. The deliveries have yet to happen.

Meantime, Xcel, the largest utility buyer of wind power in the US, has shown increasing interest in owning and operating its own projects. Its service territory is concentrated in the upper Midwest, where some of the country's best wind resources are located. The region is characterised by growing demand for power and strong state mandates on utilities to source a greater portion of their power from renewable energy.